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City puts hotel/motel tax on November ballot

Could impose up to 7% tax

SOLON– They know it’s likely coming at some point.
Solon City Council members voted to place a hotel/motel tax proposal on the ballot for the Nov. 5 city-school election.
The measure will require a simple majority for passage.
The city has been preparing for the possibility of a hotel or other short-term rental properties for months.
The Solon Planning and Zoning (P&Z) Commission has been working on a number of revisions to the city’s zoning code, including the creation of bed and breakfast (B&B) and short-term rental ordinances.
At a March meeting where draft ordinances were first reviewed by council members, City Administrator Cami Rasmussen said P&Z members investigated adopting the new laws as part of an overall code review because at least some interest had been expressed in both.
The code was adopted in 2004, she said, and the proposed changes are being driven by a variety of sources, including the council, P&Z, board of adjustment and the city’s comprehensive and vision plans.
At an Aug. 21 meeting, council members approved Resolution 19-42, calling for an election to propose imposing a hotel/motel tax within the city.
Rasmussen said P&Z members had reviewed the process of adopting a hotel/motel tax as part of the short-term rental and bed and breakfast ordinances.
“This is just part of the big process of knowing that those are coming and allows the city to recoup tax if the voters approve to do so,” she told council members.
The draft language dealing with the temporary stay industry would limit both types of lodgings to four guests rooms, and while bed and breakfasts could be located anywhere in town, short term rentals would be restricted to commercial zoning only.
At the Aug. 21 meeting, Rasmussen indicated the P&Z had originally sought to restrict hotels and motels to commercial highway zones, but is now recommending they be allowed in any commercial area.
If approved by voters, the hotel/motel tax could be in place by Jan. 1, according to the Iowa Department of Revenue’s website.
Iowa's state code allows a city to impose a hotel/motel tax of up to 7 percent, while the state collects its own 5 percent tax.
City Attorney Kevin Olson noted 50 percent of the tax revenue must be spent by the city on recreation and tourism while the other 50 percent can be used for any lawful municipal purpose.
“That’s just the statutory language for that collection,” he explained.
The resolution will be sent to the county auditor, who will present it to the supervisors, who vote to direct the commissioner of elections to set up an election date, according to the state.
The new tax can be implemented on one of two start dates: Jan. 1 or July 1. The Department of Revenue must be given 45 days’ notice of the imposition of the tax in a new jurisdiction, which means an election to impose the tax must be held on or before Nov. 14 or May 14.
Once imposed, the hotel/motel tax must remain in effect at the rate imposed for a minimum of one year, after which it can be modified or repealed.
The tax is remitted to the Department of Revenue with hotel/motel quarterly sales tax returns and is distributed to the appropriate jurisdictions on a quarterly basis.
The tax applies to the renting of sleeping rooms for periods of 31 consecutive days or less at hotels, motels, inns, public lodging houses, rooming houses, bed-and-breakfasts or any place where sleeping accommodations are furnished to transient guests, according to the state.
The local hotel/motel tax is applied in addition to the state rate of 5 percent but the rental is exempt from local option sales tax.
Sales other than room rental are subject to the 6 percent state sales tax rate and local option sales tax, if any.
The resolution only places the measure on the ballot for voters, Olson noted. If approved, the appropriate ordinances would follow.
“There would be no additional cost for this proposal to be on the ballot since it going to be a regular city, and now school district, election,” Olson added.
Council members had no questions on the resolution and passed it with a 4-0 vote with council member Shawn Mercer absent.